Bloomberg News

Draghi Says ECB Policy Can’t Address Root Causes of Euro Crisis

April 15, 2013

European Central Bank President Mario Draghi said monetary policy can’t address the root causes of the sovereign debt crisis and it’s up to governments to enact structural reforms.

“Problems in the euro-area economic landscape still loom large” and “the way out is to restore competitiveness,” Draghi said in a speech in Amsterdam today. “Undertaking structural reforms, budget consolidation and restoring bank balance-sheet health is neither the responsibility nor the mandate of monetary policy.”

Countries from Greece to Spain are struggling to haul their economies out of a recession exacerbated by spending and investment cuts. Draghi this month signalled the ECB may expand its stimulus if the 17-nation economy deteriorates further and the ECB’s prediction of a gradual recovery in the second half is placed in doubt.

“Monetary policy can support the reform progress by safeguarding price stability and anchoring inflation expectations,” he said today. “But it cannot substitute for actions that other actors, including the private sector itself, must take.”

Draghi said that “within the limits of our mandate, we have acted with determination.”

While fragmentation in euro-area financial markets is receding, the ECB’s “very accommodative monetary policy stance is only partly passed on to the financing conditions faced by firms and households in some euro-area countries,” he said.

Small and medium-sized enterprises are suffering especially from a shortage of adequate funding, Draghi said. “This is especially disconcerting given that SMEs account for about three quarters of euro area employment.”

To contact the reporters on this story: Jana Randow in Frankfurt at; Stefan Riecher in Amsterdam at

To contact the editor responsible for this story: Craig Stirling at

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